Abstract
Microfinance institutions (MFIs) play an important role in enabling poor households to escape poverty. MFIs cannot help borrowers if their own performance is poor. This study evaluates financial performance of Village Funds (VFs) and Saving Groups for Production (SGPs) to determine how well the MFIs are performing financially and how to improve the institutions’ future performances. The study evaluates MFIs’ performance, including MFI characteristics, outreach, productivity, financial structure and financial performance. Data are collected from the annual reports of MFIs between 2014 and 2016. VF and SGP annual reports were collected by the Government Savings Bank between 2014 and 2016. Data are analyzed using descriptive statistics, such as means, to compare the VFs’ and SGPs’ performance. The result shows that SGPs are bigger than VFs in terms of the average number of members and borrowers. However, VFs provide more loans than SGPs to poorer clients. In terms of loan management, SGP staff are more efficient than VF staff. SGPs’ profits are significantly higher than VFs’ profits. In the context of financial structure, SGPs are funded through member deposits, while VFs receive government subsidies. The results indicate that both VFs and SGPs are profitable and financially sustainable.
Highlights
Over the past six decades, Thailand has been developing its economy based on national and social-development plans
The result shows that Saving Groups for Production (SGPs) are bigger than Village Funds (VFs) in terms of the average number of members and borrowers
In terms of loan management, SGP staff are more efficient than VF staff
Summary
Over the past six decades, Thailand has been developing its economy based on national and social-development plans. The portant role in the credit market in Thailand, esfirst group includes formal MFIs, such as banks pecially for the poor who live in rural areas and and nonbanking institutions that are regulated who are often unable to access formal financial by prudential regulations. This group consists of services (Fongthong & Suriya, 2014). SGPs provide loans to improve livelicome and poor people can access financial servic- hoods of their members and to deal with emeres from community-based MFIs, such as VFs, co- gencies. ADB (2013) reveals that over 50% of VF borrowers and 40% of SGP borrowers have average incomes of less than THB 6,000 per month
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